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MEDICAL YEAR
IN REVIEW

Medicare Advantage pays MA Plans a base monthly rate for each References
beneficiary they cover. The government makes this “per member, 1 Health Care Fraud and Abuse Control Program Report for Fiscal
per month” payment irrespective of the services that patients actually Year 2021. (2021, July). Retrieved from U.S. Department of Health
receive or that Plans actually reimburse. The base rate that Medicare & Human Services, Office of Inspector General: https://oig.hhs.gov
Advantage pays to MA Plans may increase due to risk factors that /reports-and-publications/hcfac/index.asp.
make caring for beneficiaries more challenging and costly. These risk 2 Part C Improper Payment Measure (Part C IPM) Fiscal Year 2021
factors include a beneficiary’s health status. If a beneficiary has a (FY 2021) Payment Error Rate Results. (n.d.). Retrieved from Cen-
chronic illness or multiple diagnoses, a risk adjustment is made to ters for Medicare & Medicaid Services: https://www.cms.gov/
augment the monthly base rate payment for that beneficiary. This files/document/fy-2021-medicare-part-c-error-rate-findings-and-
creates a perverse incentive: MA Plans can earn more by making results.pdf.
their beneficiaries seem sicker on paper than they are in person. This 3 Abelson, R., & Sanger-Katz, M. (2022, October 8). 'The Cash Mon-
is exactly what the Department of Justice has accused the major MA ster Was Insatiable': How Insurers Exploited Medicare for Billions.
Plans of doing. The Department’s allegations against Kaiser Perma- The New York Times. Retrieved from
nente (KP) are exemplary. https://www.nytimes.com/2022/10/08/upshot/medicare-advan-
On October 25, 2021, the government intervened in a whistle- tage-fraud-allegations.html.
blower lawsuit by filing a complaint against KP and its MA Plans. 4 Remarks of Deputy Assistant Attorney General Michael D.
The complaint accuses them of perpetrating a billion-dollar fraud Granston at the ABA Civil False Claims Act and Qui Tam Enforce-
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against Medicare Advantage. The suit contends that KP combined ment Institute. (2020, December 2). Retrieved from United States
high-tech strategies (data-mining software and algorithms) and low- Department of Justice: https://www.justice.gov/opa/speech/re-
tech manual chart reviews to scour patient files for missed billing op- marks-deputy-assistant-attorney-general-michael-d-granston-aba-
portunities – diagnoses that were not made but could be added to civil-false-claims-act.
patient files to justify upward risk adjustments and higher monthly 5 Freed, M., Biniek, J. F., Damico, A., & Neuman, T. (2022, August
payments. Once it identified new diagnoses, KP purportedly cajoled 25). Medicare Advantage in 2022: Enrollment Update and Key
and pressured physicians to add them to patient records, which would Trends. Retrieved from KFF: https://www.kff.org/medicare/issue-
then be submitted to the government, sometimes years later, for ad- brief/medicare-advantage-in-2022-enrollment-update-and-key-
ditional reimbursement. trends/.
The following allegations from the government’s complaint against 6 United States ex rel. Osinek v. Kaiser Permanente, No. 3:13-cv-
KP illustrate how the scam worked: 1) one of KP’s MA Plans directed 3891-EMC (N.D. Cal.) (#110).
radiologists to find evidence of calcium in the aorta and to interpret 7 Id. at ¶¶ 244-45.
the evidence as atherosclerosis; 2) data miners subsequently searched
patient files for the findings and key terms that the Plan had instructed John J. LoCurto, J.D., Assistant Professor of Medical Jurispru-
radiologists to use; 3) the Plan then prompted physicians to review the dence & Health Policy at The University of the Incarnate Word
findings, diagnose atherosclerosis of the aorta, and add the new diag- School of Osteopathic Medicine (UIWSOM)
nosis to their patient records to justify an upward risk adjustment and
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higher payment per patient. In this way, the Plan created an assembly
line of fraud that cost Medicare Advantage millions.
The government’s claims against KP, UnitedHealth, Anthem and
others are just that – claims. They have not been proven in court. What
is more, it is tempting to focus exclusively on the MA Plans and their
alleged misconduct, but that would be shortsighted. The government
bears responsibility as well. Frauds this pervasive do not happen
overnight. They take time, exploit programmatic flaws and depend on
lax oversight. The government’s recent enforcement efforts are overdue
and insufficient. The United States healthcare system cannot enforce
its way out of its Medicare Advantage problem. It must instead adopt
sensible healthcare policies that prioritize people, not profit.

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